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Osage Municipal Utilities Demand-Side Management

Dennis M. Fannin 
Osage Municipal Utilities 
P.O. Box 207 
720 Chestnut Street 
Osage, IA 50461 
tel: (515) 732-3731 
fax: (515) 732-5498 
No Internet Link Currently Available 



The Osage Municipal Utilities (OMU) Demand-Side Management program uses giveaway programs, rebates and energy audits to promote energy-efficiency among its customers. Started in 1974, this voluntary program has achieved nearly universal participation from customers in a variety of its initiatives including the placement of insulating blankets around hot water heaters and the installation of load management devices on air conditioners.

Wes Birdsall, then general manager of OMU, started the demand-side management program in response both to rising oil prices in 1973 and growing demands for energy. To keep rates down and avoid building additional generating capacity -- which meant a costly, polluting, coal-burning power plant -- Birdsall decided to see if Osage could become more efficient with the energy already available. If so, a winning situation for all parties would be at hand: customers would enjoy lower rates, OMU would avoid costly infrastructural development expenses, pollution would be reduced, and money saved by homeowners and businesses could be kept in the local economy.

As one of his first steps, Birdsall climbed into a plane and took aerial infrared photographs of the town, circled the dark spots indicating heat loss, and visited the owners of those sites. It wasn't hard to convince customers that investments in energy efficiency, such as insulation and weather stripping, were in order.

"One of the most effective things we did was to take an infrared scanner into many local buildings," says Birdsall. "When we showed people on the scanner how much energy they were losing, they usually were on the phone to a contractor before we could get out the door."

Since then the program has expanded and includes air conditioner and furnace tune-up rebates, compact fluorescent lighting rebates, free appliance testing, free low-flow water fixtures and free energy audits. The program now saves Osage residents more than $1.2 million a year in energy costs, giving Osage's 3,800 residents an economic boost in the arm.

"I don't see any difference between a dollar brought in by a new business and a dollar that's saved due to energy conservation," says Birdsall.

Although Osage and other communities can still do even more -- the Japanese and Germans use energy twice as efficiently as we do -- Osage's ground breaking efforts as detailed on the PBS program, Race to Save the Planet, have earned it the title, "the energy conservation capital of America."

Program Highlights

Economic Benefits

  • Economists for the state of Nebraska estimate that 80% of every dollar spent on energy bills leaves the state economy without generating further economic activity.
  • Energy conservation has an economic multiplier of $2.32, meaning that every $1.00 spent conserving energy generates $2.32 in local economic activity. The economic multipliers associated with consuming, rather than conserving, energy are far lower. Natural gas purchases have an economic multiplier of $1.48 while purchases of electricity have a multiplier of $1.75.
Participant Examples
  • Fox River Mills, a medium-sized textile manufacturer that produces socks for the sporting goods industry, has reduced the energy costs of producing a pair of socks by 29%. The factory produces 10 million pairs of socks a year and the savings add up to $150,000 annually. The plant, which employed 110 workers in 1984, employs more than 300 today.
  • Steele's Super Value store put all their refrigerator compressors in one room, insulated it, and piped the waste heat into the store for heating during the winter. The store saves about $600 a month, enough to lower prices by 5% and to keep people from driving into town to buy from the larger competitors.
Program Details
  • All street lighting has been changed to high pressure sodium fixtures, which have paid for themselves in 4 and 1/2 years.
  • Hundreds of deciduous trees have been planted as part of a long-term project to cut future air conditioning costs.
The Demand-Side Management Program offers:
  • Free use of electric test meters to locate inefficient appliances.
  • Infrared scans of all businesses and homes.
  • Scans of the electrical system to identify line loss.
  • A load management program that cuts electric peak loads by up to 10%.
  • A home weatherization program for low-income customers.
  • Free compact fluorescent bulb giveaways and rebates.
  • Low-cost leasing of a hydraulically-operated tree planter to replace dead elm trees, saving up to 50% on air conditioning bills. Trees are donated by Osage Nursery.
  • Complete energy audits with interest buy downs for efficiency projects.
  • Efficiency training in elementary and secondary schools allowing students to take ideas home.

Vital Statistics

Program Management/Partnerships: Osage Municipal Utilities Demand-Side Management is a program of Osage Municipal Utilities (OMU). OMU works in partnership with Osage Nursery, the Iowa Department of Natural Resources and the U.S. Department of Energy (DOE). 

Budget: The program has cost OMU about $250,000, but has saved them -- and the city -- millions.

Community Served: The 3,600 residents of Osage, Iowa.

Measures of Success:

  • Osage saves more than $1.2 million a year in energy costs.
  • The average homeowner saves almost $200 a year in energy bills; the average business saves even more.
  • Compliance
  • Ninety-six percent of users have had load management devices installed on their central air conditioners, 100% have received insulating jackets for their water heaters, and 950 compact fluorescent light bulbs are in use.
  • Efficiency Measures
  • Instead of having to add generating capability as projected in 1984, Osage has been able to delay it until 2000.
  • Since 1974, Osage has reduced its natural gas consumption by 45% and reduced its annual growth in electricity demand from 6% to 3%.
  • Osage Municipal Utilities has been able reduce electricity rates by 19% during the last eight years and natural gas rates by 5% during the last five years.
  • Infrared scans reveal that 85% - 90% of all homes are now well insulated.
  • Environmental Benefits
  • Over their lifetime, the 950 compact fluorescent bulbs in use will prevent the burning of nearly 200 tons of coal. 
  • Every year the compact fluorescent bulbs will reduce annual pollution by nearly 1,000 tons of carbon dioxide and 13 tons of sulfur dioxide.
  • Program Replication
  • Numerous utilities across the United States and world have asked for information regarding the OMU program, including the Electricity Supply Association of New Zealand and the Swedish Power Board. The program has been replicated by 36 other Iowa utilities.

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